Slow energy demand and carbon emission cuts are putting major pressure on the power industry, a top Duke Energy executive said today. Chief Financial Officer Steve Young spoke at a Wells Fargo energy conference about challenges facing coal, solar, wind, and nuclear energy.
Like any publicly-held corporation, Duke’s business relies on growth, but the company projects energy usage will rise only sluggishly, between one and 1.5 percent a year, even as the economy approaches full recovery.
“We’re seeing more people live in smaller homes, apartments versus single family homes,” says Young. “We’re seeing every new appliance, every new lighting fixture be more efficient than the one it’s replacing. That’s putting a unique dynamic on our industry.”
Solar and wind energy
Young says utilities—and regulators—will need to adapt as customers change how they use and get energy, but he sees renewable energy remaining a small fraction of Duke’s total mix.
“The intermittency there is a challenge in terms of long range planning for meeting broad energy needs,” says Young.
Intermittency means that the plants only produce energy when the sun shines or the wind blows. In a planning document submitted to state regulators, Duke projects renewables will account for about four percent of its energy mix in the Carolinas in 2029, up from about one percent currently.
Nor does Young see new coal plants as a viable option, because of new EPA rules to cut carbon emissions.
“Effectively new coal has been shut out as one of those options,” Young says.
Under a rule the EPA proposed in 2013, new coal plants will require technology to capture some carbon, which Young says he “would not call proven.”
The cost and time to build new plants has become nearly prohibitive. Duke’s “newest” nuclear facility is the Harris Plant in Wake County, which went online in 1987. Young says he could see nuclear becoming more competitive in coming decades, but Wisconsin Energy CEO Gale Klappa offered an alternative. He suggested companies will keep current plants running past their scheduled life of 60 years.
“There’s now really a lot of work being done on whether or not, economically, one can work from a sixty year life to an even longer life for some of the units that are still operating incredibly well,” Klappa says.
Duke is evaluating that option for its Oconee and Robinson plants in South Carolina. But with challenges for coal, renewables, and nuclear, the company is mainly focused on using natural gas.